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2025 (4) TMI 742 - AT - Income TaxReopening of assessment u/s 147 - addition made in violation of the provisions of section 149(1)(b) - bogus LTCG - HELD THAT - As we found that the assessment order was passed on the basis of surmises and without any documentary evidences to prove that the assessee ever transacted in the shares of Vas Infrastructure Ltd or earned any LTCG. Moreover the reassessment proceedings were initiated in violation of the provisions of section 149(1)(b) of the act therefore Ld CIT(A) rightly deleted the additions. No new documents or evidences have been brought on record by Ld. DR to controvert or rebut the findings so recorded by Ld. CIT(A). Decided against revenue.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Addition of Rs. 23,532 as Short-Term Capital Gain The relevant legal framework involves the Income Tax Act, 1961, particularly sections dealing with capital gains and reassessment procedures. The Assessing Officer (AO) added Rs. 23,532 to the assessee's income, claiming it as STCG from transactions in shares of Vas Infrastructure Ltd. However, the assessee contended that no such transactions occurred and that the addition was made without evidence. The Tribunal found that the assessment order lacked documentary evidence to support the claim that the assessee transacted in shares of Vas Infrastructure Ltd. The Tribunal agreed with the CIT(A)'s decision to delete the addition, as the AO failed to substantiate the claim with concrete evidence. 2. Validity of Reopening Assessment under Section 147 The legal framework here involves sections 147 and 149 of the Income Tax Act, 1961. The reassessment was initiated based on information received regarding alleged transactions in penny stocks, specifically Vas Infrastructure Ltd. However, the notice under section 148 was issued beyond four years from the end of the relevant assessment year, invoking section 149(1)(b). This section requires that the income escaping assessment should be Rs. 100,000 or more for reopening beyond four years. The Tribunal noted that the addition made was only Rs. 23,532, which is below the threshold limit specified in section 149(1)(b). Thus, the reopening was deemed invalid as it did not meet the necessary conditions for reassessment after four years. 3. Transactions Involving Shares of Vas Infrastructure Ltd The assessee denied any involvement in transactions with Vas Infrastructure Ltd. The AO's claim was based on data from BSE Ltd, but the assessee provided evidence showing transactions in Orissa Mine, not Vas Infrastructure Ltd. The Tribunal observed that the AO did not provide the assessee with the BSE reply during the assessment, nor was there evidence of transactions in Vas Infrastructure Ltd. The Tribunal found the CIT(A)'s findings persuasive, noting the absence of typical traits of bogus LTCG transactions and the lack of evidence supporting the AO's claims. Consequently, the Tribunal upheld the deletion of the addition. 4. Procedural Adherence and Evidence Presentation The Tribunal examined whether the AO adhered to procedural requirements, such as providing the assessee with relevant documents. The AO failed to furnish the BSE reply to the assessee, which was crucial for substantiating the claim of transactions in Vas Infrastructure Ltd. The Tribunal agreed with the CIT(A) that the assessment was based on assumptions rather than evidence. SIGNIFICANT HOLDINGS The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence for the AO's claims and procedural violations in the reassessment process. The following core principles and determinations were established:
The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the addition of Rs. 23,532 from the assessee's income and highlighting the procedural lapses in the reassessment process.
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